Question

Find Goodwill of ABC partnership firm at 2 years purchase of Average profit for last 3 years. The profits were; Rs. 15,000 [1st year] Rs. 17,000 [2nd year] Rs. 13,000 (3rd year] *​

Answer 1

Answer:

The Amount of Goodwill =  Rs. 30,000

Explanation:

Given :

• The Goodwill of ABC partnership firm should be valued on the basis of 2 year purchase

• 3 years average profit :

$\begin{tabular}{|c|c|}\cline{1-2} Year & Profit \: (Rs.) \\\cline{1-2}\ I \: st & 15,000 \\\cline{1-2}\ II \: nd & 17,000 \\\cline{1-2}\ III \: rd & 13,000 \\\cline{1-2}\end{tabular}$

To find :

• Calculate the Value of Goodwill of ABC partnership firm

Solution :

Goodwill = Average Profit × Number of year's Purchases

★ Average profit =

$\sf{\longrightarrow{\dfrac{Total \: Profit \: for \: past \: given \: years}{Number \: of \: years}}}$

$\sf{\longrightarrow{\dfrac{15,000 \: + \: 17,000\: + \:13,000}{3}}}$

$\sf{\longrightarrow{\dfrac{45,000}{3} = 15,000}}$

Average profit = Rs. 15,000

Goodwill = Average Profit × Number of year's Purchases

Number of years Purchases = 2 years

Goodwill = 15,000 × 2

$\longrightarrow \: 30,000$

Goodwill = Rs. 30,000

Therefore, The Amount of Goodwill =  Rs. 30,000.